Building a Business Plan
While business plans serve somewhat as a guide, more importantly they serve as an understanding of what running the business will be like. In other words, business plans tell you what is the most important thing to watch and spend time on.
- Chris Gibbons, Littleton, CO
Business plans have two basic functions:
1. They are essential for obtaining a loan from a bank or an investment.
2. Business plans are also your first dry run at starting up a business before you put substantial money into it.
At the heart of all business plans are at least five common sections that address the core questions that face all new start-ups. We recommend proceeding through these sections in order, making sure that you can complete each step before proceeding to the next. For example, if the market feasibility proves to be negative, then there is no need to proceed to developing financials.

The core sections (and the core business questions being answered) are:

I. Description of the business and industry
What is it you propose to do?
Is it completely new or is it an organized industry?

II. Market Feasibility Analysis
How many people want this? (Request a demographic or consumer spending report)
How many people are providing it? (Request a competitor report)
Is the market growing or shrinking?
Why would customers pick my business over everyone else?

III. Financials (Contact the SBDC for assistance)
What are my fixed and variable expenses?
How much do I have to make to break even?
Can I make a profit?

IV. Marketing Plan
What is the profile of my customers?
Where are they?
Where do they congregate?
What is the most cost effective way of reaching them?
What is their motivation and how do I work that into my message?

V. Documentation of Experience
What experience does the management team have in the industry? In business? In the
specialized areas of sales, accounting, strategy, operations, organization building?

Business Plan Outline

1. Cover sheet
2. Statement of purpose
3. Table of contents

I. The Business
A. Description of business
B. Marketing
C. Competition
D. Operating procedures-Schedule a professional consultation
E. Personnel-Schedule a professional consultation
F. Business insurance

II. Financial Data (Contact the SBDC)
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro-forma income projections (profit & loss statements)
1. Three-year summary
2. Detail by month, first year
3. Detail by quarters, second and third years
4. Assumptions upon which projections were based
F. Pro-forma cash flow

III. Supporting Documents
A. Tax returns of principals for last three years Personal financial
statement (all banks have these forms)
B. For franchised businesses, a copy of franchise contract and all
supporting documents provided by the franchisor
C. Copy of proposed lease or purchase agreement for building space
D. Copy of licenses and other legal documents
E. Copy of resumes of all principals
F. Copies of letters of intent from suppliers, etc.

Adapted from www.sba.gov